A Wealth of Ideas

Image

Michael Walrath last month at the home he is building in Montauk, on Long Island.CreditGordon M. Grant for The New York Times

By George Gurley

March 26, 2014

Late last year, at a party at the Crosby Street Hotel in SoHo to celebrate a documentary about childhood obesity called “Fed Up,” the tech and night-life mogul Michael Walrath, one of the film’s producers, spoke briefly to the 60 or so people gathered in the hotel’s Prince Room.

The dark and cleft-chinned Mr. Walrath, 38, said that he hoped the movie, which was headed to the Sundance Film Festival, would make them angry and inspire them to do something. After his speech, he stood calmly chatting in the middle of the room, steering clear of the open bar and ignoring trays of hors d’oeuvres. He is careful about what he eats, working out every day and maintaining a vegetable garden at the house in Oyster Bay, N.Y., on Long Island, where he lives with his wife, Michelle, and their four children.

“He’s superhot,” whispered Katie Couric, the narrator of the film.

“He’s really smart,” said Cassandra Huysentruyt-Grey, the wife of Brad Grey, the chief executive of Paramount Pictures, who called Mr. Walrath a “sexy” Internet investor and a “rock star.” “I mean, he invented a company and sold it for almost a billion dollars,” she said. “And he’s really cute.”

A decade ago, Mr. Walrath was the C.E.O. of Right Media, a digital advertising start-up. In 2007, Yahoo bought it for $850 million, a record deal in New York until Yahoo’s purchase of Tumblr last year for $1.1 billion. He could have retired then and there, but instead he has become an “angel” investor, helping out young companies, like Ms. Huysentruyt-Grey’s beauty venture, Violet Grey, and the party website Guest of a Guest. He is also an owner of the Surf Lodge, the boutique hotel and hot spot in Montauk that he bought into 2011 for $7 million.

Yext, a software company aiming to be the next Yellow Pages, is perhaps less glamorous but the largest item in his portfolio, with 250 employees: Mr. Walrath, chairman of the board, has an office in its Madison Square Park headquarters. But his real workplace is wherever he happens to be when his cellphone is turned on. Recently that was the NoMad hotel, where Mr. Walrath ordered cod and demonstrated Yext’s new Snapchat-like technology, Confide, which causes words in a text message to appear discreetly line by line and then, poof, vanish. “Here’s the only downside,” he said. “Now I have to actually read this message.”

If the old Masters of the Universe were focused and driven, barking orders in pinstripes through their Motorola StarTACs and spewing testosterone, Mr. Walrath is a more mild-mannered 21st-century version, one who wears a John Varvatos T-shirt and sweater over black jeans to a meeting with a reporter and has trouble deciding which project on his plate to discuss first. He settled on his aspirations to take the Surf Lodge global, though with some stealth. “Our customers see themselves as discoverers,” he said. “They don’t want to feel like there are vacationing out of a Vegas or Miami guidebook.”

Mr. Walrath at his unfinished home in Montauk.CreditGordon M. Grant for The New York Times

He was also there to support “Fed Up,” from Atlas Films, a production company he started in 2008 so a friend, Stephanie Soechtig, could make documentaries. Along with Ms. Couric and his wife, it was produced by the environmental activist Laurie David. Ms. David’s former husband, Larry David, helped with the financing, as did the New York Giants quarterback Eli Manning and the former New York mayor Michael R. Bloomberg, who is interviewed in the film along with Bill Clinton.

But Michelle Obama, a noted advocate for better eating habits, declined to participate. Still, Mr. Walrath said at the Crosby Street Hotel party, “I would love to host a screening at the White House.”

The next night, he accompanied the Greys to the premiere of “The Wolf of Wall Street” at the Ziegfeld Theater. He said the movie brought back memories of his late-1990s stint at D. H. Blair, a brokerage firm where he made 500 cold calls a day for $250 a week.

Mr. Walrath got that job through the classified ads after a stint bartending at Panchos & Gringos, a Mexican restaurant in his hometown, Brookfield, Conn. There had been a regular there who had built a successful commodities trading business, drove a nice car and always had a roll of $100 bills in his pocket.

“He was loud and brash and made sure everyone knew how successful he was,” said Mr. Walrath, who had floundered after graduating from the University of Richmond, where he majored in English literature. “When he walked in, I knew there was going to be an extra two or three hundred dollars in the tip jar, so I was always happy to see him, but I didn’t relate to him.” And yet, he said, “there was something about the way he was that made me curious about that world.”

After D. H. Blair was raided by the Federal Bureau of Investigation and the Securities and Exchange Commission and shut down, Mr. Walrath moved to Sands Brothers Asset Management on Park Avenue. “It was a really tough culture, a toxic, chest-beating environment because everyone was just breaking each other down all the time,” he said. “So my shtick was, I just spoke quietly and normally but persistently, and it worked.”

One day after he made a big sale, a group of higher-ups called him into a room. “You’re going to be super successful just like us,” he said they told him.

“What that meant was, I’m going to be making a ton of money, wearing the Wall Street suits, driving a Mercedes and going to the strip club after work,” Mr. Walrath said. A week before he was scheduled to take the exam to become a licensed broker, his boss handed him a $100 bill and sliced his tie with a pair of scissors. That night, Mr. Walrath had a panic attack. He quit the next day and went to work for fitness clubs.

Image

At a technology conference in New York in 2011 with, from left, Beth Comstock, Scott Harrison, Greg Tseng and Sandhya Venkatachalam.CreditJoe Corrigan/Getty Images

In 1999, a colleague was hired by DoubleClick, the digital-advertising pioneer, and brought in Mr. Walrath. “It was the perfect environment for me: unlimited upside, no barriers, no bureaucracy,” he said. When the Internet bubble burst in early 2000, DoubleClick laid off 20 percent of its employees, but Mr. Walrath was promoted to director of direct marketing.

He started Right Media with Jonah and Noah Goodhart, two brothers who had been big buyers of DoubleClick ads and were intrigued by an idea Mr. Walrath had for an open auction marketplace for web publishers and advertising networks. Revenue grew from $1.3 million in 2003 to $34.8 million in 2006. In April 2007, Yahoo, which had already put $45 million into the company, bought the rest, and the three partners ended up splitting approximately $850 million. Ernst & Young gave Mr. Walrath an Entrepreneur of the Year award.

And thus began the long exhale.

These days, Mr. Walrath turns off his phone at night (“one of the most freeing things I’ve ever done”) and relishes his children, the garden, golf, a 38-foot Cabo boat and his two helicopters, which he flies but always with a professional pilot sitting next to him.

Just after 11 a.m. on a recent Wednesday, he pointed down to East Egg and West Egg from “The Great Gatsby,” not far from his mansion. At the airport, he found his Land Rover Defender and recalled how a few months after the Yahoo sale, having fallen in love with Montauk after a visit with his wife, he bought a house on seven acres and became a minority owner of the recently opened Surf Lodge, which had quickly acquired a laid-back but exclusive reputation.

By its fifth year, though, Surf Lodge was having serious operational troubles, with some 700 unpaid fines and violations. There were too many investors and operating partners, all of them squabbling, and no one in charge, according to Mr. Walrath.

In March 2012, Surf Lodge went up for sale and buyers started poking around, but they were scared off by the liabilities, Mr. Walrath said. He decided to buy out the other investors and join forces with one founder, Jayma Cardoso, a Brazilian-born night-life veteran.

“He is what he preaches,” Ms. Cardoso said at the Crosby Street Hotel. She called him “a visionary,” as well as principled and calm.

Mr. Walrath befriended the town supervisor, negotiated a $100,000 settlement and began making changes before a 2012 reopening. He decided that the Surf Lodge should close two hours earlier, at 2 a.m. (Before he took over, he said, deciding what time to close was like an act of Congress.) He also reduced capacity to 500. On some nights, there had been that many revelers waiting outside by the velvet rope and 1,500 customers inside, jostling elbows, trying in vain to order $18 drinks and getting into fights.

Image

The Surf Lodge in Montauk; Mr. Walrath is an owner.CreditYana Paskova for The New York Times

The new boss had some “funny” conversations, he said, with staff members who didn’t grasp the concept of actually turning people away once they hit capacity. Night-life experts warned that if the place wasn’t jammed, it wouldn’t feel like the right kind of party.

“My response was, ‘Well, you’re right, it’s not going to feel like that kind of party anymore,’ ” Mr. Walrath said. “After a while they got it, it clicked and they said: ‘Hey, you know what? The fire marshal’s here and he’s happy, the police are happy, the customers are happy and frankly, it’s a better brand experience, too.’ ”

After lunch at a deli, Mr. Walrath made a stop at the shuttered Surf Lodge, which reopens in May. “I mean, it’s deathly still,” he said on the deck out back, which doubles as a music space. He fiddled with his iPhone and found a clip of Willie Nelson doing a duet with Jimmy Buffett, while his brood played with Naomi Watts and Liev Schreiber’s children. Patti Smith also performed at the lodge last summer, and Courtney Love played a few impromptu sets.

But Mr. Walrath said he was not in the night-life business to meet celebrities.

“Schmoozing? No, for me that’s not one of the main benefits,” he said. “If I meet someone and they’re genuinely somebody I want to spend time with and be around, then that’s awesome. Whether they’re famous or not doesn’t really matter to me.”

The next stop was at his Montauk spread, which is under construction after a renovation revealed a crumbling foundation. “They saved the pool and pool house,” Mr. Walrath said.

Inside, the house looked half-finished, but with views of Lake Montauk. “Michelle and I, we’re sensitive to the fact that it is a very large home, right?” he said. “But we also are really sensitive to the fact that you don’t want it to be a huge energy sinkhole.”

He showed off the kitchen. “I’ll be cooking in here,” he sang out. “I’m a pretty good cook.”

Indeed, Mr. Walrath said that one of his models of how to wear success lightly is Thomas Keller, the restaurateur known for the gastronomic temples the French Laundry and Per Se.

“Low profile, doesn’t do tons of publicity, doesn’t have any reality TV shows, but he’s a genius,” he said, and laughed. “I aspire to be the Thomas Keller of New York tech. Not really that well known.”